What Is A Compliance Program?


Recently, federal and state agencies have beefed up their enforcement against misconduct by both public and private businesses. Additionally, increased regulations against emerging threats like cybercrime make compliance programs a top priority for modern businesses. Such a program ensures that your organization meets all its legal and regulatory obligations. Moreover, it can help you avoid the hefty penalties and fines accompanying corporate misconduct lawsuits and prosecutions.

A compliance program is not simply a piece of paper that you can shelve and forget about. Instead, it is a continuous process integrated within an organization’s systems, policies, procedures, and values to demonstrate its commitment to laws, regulations, and ethics. An effective program prevents, detects, and monitors risks and misconduct. It also includes the training modules that are designed to remedy any breaches and create a compliance culture.

The Importance Of A Compliance Program

It is tempting to dismiss compliance programs as efforts that only drain money and time. However, such a dismissal would be short-sighted as a compliance breach can significantly hurt your reputation, and in worst-case scenarios, result in the firm’s closure.

The primary goal of a compliance program is to address regulatory obligations. However, it also mitigates internal fraud risks and supports a company’s financial, operational, and strategic goals.

Ultimately, the objective of a compliance program is to protect your company. For example, employees can be trained and encouraged to report any bribery cases that put the organization in trouble. If your company is investigated for corruption or bribery, you can show the prosecutor that you have compliance measures in place to prevent such cases. As a result, you reduce the company’s liability in the case.

The benefits of a compliance program also include:

  • Avoid waste, discrimination, and other unethical practices that bring inefficiency in the workplace
  • Detect misconduct
  • Train employees on the best practices to follow external and internal rules
  • Enhance your reputation as an ethical company and build trust with customers
  • Remedy compliance breaches

The Key To An Effective Compliance Program

Large binders of regulations and procedures are not the hallmark of an effective compliance program. In fact, complex policies are among the causes of failed compliance programs. If your program is failing in specific areas, you probably need better measurement tools. For example, maybe you use completion rates to determine the success of training programs.

Instead, focus on how employees demonstrate their understanding of the policies through measures like changed behavior. In other cases, the entire program can fail due to lack of substance and failure to keep pace with change, among other reasons. Below are some considerations to ensure the effectiveness of a compliance program:

1. Identify Risks, Challenges, And Scope

A compliance program protects your company from risks. Therefore, you must customize it to your organization’s unique challenges. Additionally, it is essential to identify the regulatory and internal compliance needs that the program will address. Some compliance risks that your company can face include cyber-crime risks, anti-bribery laws, environmental laws, internal theft, and antitrust and competition regulations.

2. Conduct Internal And External Surveys

Solicit surveys from the Board, employees, and managers to get internal intelligence. Then, look at how your competitors respond to compliance issues and evaluate industry developments, including legal actions, to understand risks.

3. Define Your Intended Results

For a compliance program to be useful, you need to define the objectives it is intended to achieve. For example, maybe you want to strengthen your IT infrastructure to meet cybersecurity regulations? By clearly defining the program’s goals, you can establish a reliable and effective regulatory framework.

4. Review Existing Policies

A policy audit highlights what you already got covered with existing policies. Also, ensure that the procedures align with current laws and regulations. Once you identify duplicate and outdated policies, you can establish the program’s framework.

5. Communicate Clearly

It is easier for employees and other stakeholders to adhere to the program if they understand what is expected of them. Thus, let them know the importance and benefits of the program early on. Also, make the policies easily accessible to your team. Effective lines of communication also make it easy for employees to get clarification on compliance concerns or report misconduct.

6. Assess The Cultural Support

An ethical culture is a vital building block for an effective compliance program. In this way, every new employee understands your organization’s commitment to ethical conduct while senior management constantly affirms the need for compliance. You can test the cultural support via independent evaluations and surveys.

7. Regular Training

Tailor the training modules to each employee’s respective responsibility in keeping the organization compliant. Then, keep educating the workforce as employees take up new roles in the company.

8. Measure Results

Testing staff on their retained knowledge about compliance training is one way to test the program’s effectiveness. Additionally, conduct surveys to gauge employee attitudes and talk to managers about any issues and concerns. Also, create a reporting dashboard where senior managers and the board can access compliance developments and trends.

A compliance program is vital for businesses operating in the current legal environment. A customized program helps you identify, rectify, and monitor any misconduct and irregularities. As a result, you avoid heavy fines penalties and the reputation damage that comes with ethical breaches. However, you need to tailor the program to the unique risks faced by your company.